The US dollar traded higher against all of the major currencies on Friday including the Canadian dollar but even with today's rise, it is too early to declare a bottom in USD/CAD. Canada's retail sales report the most market moving piece of data today and while it printed much worse than expected, the boost that it provided for the pair was short lived.   The pair surged above 1.31 but the rally fizzled almost quickly as it happened. The selling pressure is strong for one reason alone, which is that the US dollar is weak. Economists had predicted a 0.3% rise in retail sales and the -0.1% decline caught everyone by surprise. It the first drop in 4 months and a big miss that was driven by weaker demand for food and alcohol. Consumer prices also dropped -0.2%, the first decline this year. The year over year rate was pushed down to 2% from 2.4%. Lower inflation is one of the central bank's main concerns and when combined with the pullback in spending, we can understand why the Bank of Canada turned dovish this month. With oil prices falling 6 out of the last 7 trading days, we continue to believe that I will only be a matter of time before USD/CAD bottoms. Meanwhile, the best opportunities for selling the Canadian dollar will be the crosses. USD/CAD has been consolidating in a tight range for the past month while AUD/CAD and NZD/CAD have enjoyed nearly one way gains. In the near term, we are particularly bearish CAD/JPY and EUR/CAD. As for USD/CAD, a bottom is near but we need to see a close above 1.31 for a bottom to be declared.


Meanwhile yesterday the US dollar plunged after Fed President Williams talked about taking a preemptive move with interest rates but this morning the greenback is trading higher across the board as the central bank tries to correct the confusion between magnitude and timing. Yes, there's no doubt that the Fed wants to ease and is likely to do so later this month but as Fed President Bullard noted in an interview with Dow Jones earlier this month, a 25bp cut would be appropriate. The dollar is up the most versus the euro and Yen. Weaker than expected German PPI pushed EUR/USD lower - the ECB meets next week and they are expected to set the stage for easing. Sterling is the most resilient but the losses in the New Zealand dollar was moderated by stronger than expected credit card spending.

Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD surges above 1.1100 as Trump announces steps against China

EUR/USD is trading above 1.1100, up on the day. President Trump said he orders companies to search Chinese imports for drugs. Earlier he criticized Powell's lack of action. 


GBP/USD jumps above 1.2250 on USD weakness

GBP/USD is trading close to the monthly highs above 1.2250 as the US dollar falls following Powell's hint of cutting rates and Trump's angry response. 


USD/JPY plummets to ten-day lows below 106 as Trump goes berserk on Twitter

The USD/JPY came under strong selling pressure in the last hour and erased nearly 100 pips as US President Donald Trump's latest rant on Twitter forced investors to seek refuge and ramped up the demand for safe-haven JPY. 


Powell powerless against Trump's trade wars – US braces for recession, USD set to move

"The most powerful central banker in the world" – is how we and others characterize Fed Chair Jerome Powell. While that may be true – monetary policy is reaching its limits – especially in the face of a trade war.

Read more

Gold gains more than $30, eyes 2019 highs on Trump’s tweet

Gold continues to rise sharply amid concerns about the impact of the escalation in the US-China trade war. The demand for safe-haven assets emerged over the last hours, leading to a rally in the yellow metal. 

Gold News